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The Relative City Price Convergence in Pakistan: Empirical Evidence from Spatial GLS

  • Hasan Muhammad Mohsin

    (Pakistan Institute of Development Economics, Islamabad)

  • Scott Gilbert

    (Department of Economics, Southern Illinois University Carbondale, USA)

The study estimates relative city price convergence using CPI data from July 2001 to June 2008 on 35 Pakistani cities. Two cities Lahore and Karachi are chosen to be the numeraire cities. The half life of relative city price shock has also been estimated. The study finds average half life of price shock to be less than 5 months but it varies from 1.3 to 68 months in the case of individual cities. The estimates of Spatial GLS are found to be lower than OLS which may imply that Spatial Correlations are important factor for the estimation of half life. Furthermore, the average half life of a price shock in Lahore is less than that of Karachi

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Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 49 (2010)
Issue (Month): 4 ()
Pages: 439–448

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Handle: RePEc:pid:journl:v:49:y:2010:i:4:p:439-448
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  2. LAN, Yuexing & SYLWESTER, Kevin, 2010. "Does the law of one price hold in China? Testing price convergence using disaggregated data," China Economic Review, Elsevier, vol. 21(2), pages 224-236, June.
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  6. Morshed, A.K.M. Mahbub & Ahn, Sung K. & Lee, Minsoo, 2006. "Price convergence among Indian cities: A cointegration approach," Journal of Asian Economics, Elsevier, vol. 17(6), pages 1030-1043, December.
  7. Samarjit Das & Kaushik Bhattacharya, 2004. "Price Convergence across Regions in India," Bonn Econ Discussion Papers bgse1_2005, University of Bonn, Germany.
  8. S. Mahendra Dev, 2008. "India," Chapters, in: Handbook on the South Asian Economies, chapter 1 Edward Elgar.
  9. Stephen G. Cecchetti & Nelson C. Mark & Robert J. Sonora, 2002. "Price Index Convergence Among United States Cities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1081-1099, November.
  10. Hisham Foad, 2010. "Europe Without Borders? The Effect of the Euro on Price Convergence," International Regional Science Review, , vol. 33(1), pages 86-111, January.
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